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Worries about copyright issues

I thought I had my first client: they gave me every impression that I had the job, were not worried about budget (I was charging by the hour) and they had a 3-week deadline, which I was happy to meet without charging extra. They are a reasonably large and successful company. Warning bells started to ring for me when, during our first meeting, I asked if the previous designer had copyright for their programs (the site currently uses ASP). They didn't know and said 'we would have got rid of him' if they wanted to keep copyright. I nearly said (and with hindsight should have) that if they didn't know, the designer still has copyright automatically.
We agreed to meet again in a few days to go over some rough designs, which I faithfully worked on. Foolishly I had said that payment was due on completion, no satisfaction no fee (but I would keep my work), and no contract had been signed (I felt that insistence on a contract had put off another potential client). This was yesterday. When I arrived, they seemed bad tempered and claimed not to have made the appointment, saying that they expected me to email the designs. I assumed that they had made a genuine error (I had after all asked if it was OK if I turned up with designs on paper - as it happened they were computer-based in the end). I went home and emailed jpgs of my design, which included a new company logo and detailed plans for some PHP features. I was (and still am) very pleased with it as a piece of graphic design work. He was supposed to be emailing me his feedback today so I could start coding (we spoke about this yesterday).
Today I got a short email saying 'after further interviews [what further interviews? He said I had the job] we have decided to employ a company to do the work'.
Well I will be checking in (now) 2 weeks to see if they have completed the project by his deadline, and what he gets for his money. Genuinely, I am curious, and I seriously doubt that he will have found someone who could produce something better/more cheaply in that timescale. Maybe that's just my arrogance, but I wait to be persuaded that I'm wrong ...
Then it hit me, while I was reading another forum post here. One reason I *hadn't* emailed the designs initially was to avoid potential design theft. I sensed that the MD was a cheapskate - wouldn't be surprised if he just went with someone who charged a very low all-in fee, and bugger the artistry. But what if (as another poster said was common) I find that all or part of my design is up there when I check later on? I am originally an artist / graphic designer by trade, and never did computer-based art before, so this was never an issue. Payment was always made when I physically handed over the finished painting or drawing. I am particularly worried about the logo.
Has anyone experienced theft of a/w from a mockup? Or similar? What do I do in the event that such a thing occurs? Should I sue him? Should I sue the 'company' (although I would expect that they would only use my work if he lied to them "... I had this new logo designed ..."). It's my understanding that I have copyright of my work. Has anyone ever done this? Were you successful? If you wouldn't bother, why not? If I did sue him, for how much ... the hours of work I did or some kind of damages as well?
I won't be falling for this again: I was inadequately prepared, due to the very short notice with which the first consultation happened. I think it's unlikely that he decided that he didn't like my idea when he saw it (although it's possible I suppose). I rather suspect that he *already knew he was not going to employ me when he saw me yesterday and either lied / completely forgot he asked me to do the work!*
GRRRRR

If they use your work, send a DMCA notice of infringement to their web host to have it taken offline. Then talk to a lawyer that specializes in IP law. These days a lot of lawyers will talk about a potential case for free, so there's no reason not to.

Thanks for the advice - I am in the UK. Does anyone know the local equivalent of the DMCA? It's interesting that the advice is to seek advice from a lawyer immediately.

As a post-script, I just re-read the letter which I had sent him *immediately* after our first meeting - it clearly states that we had agreed to meet at 4pm Monday to go over rough designs. The guy WAS lying. He had my letter on my desk (& claimed to have just received it, which seemed like a lie at the time).

Next time I will also make sure they see me make a note of appointments in my diary, have it on hand & re-read any letters I send before I go! Unlikely anyone else would be so slimy as to actually b****** that they hadn't made an appointment, but there you go.

Oh I will enjoy it if it comes to it. Particularly the part where they get a letter from the best firm of solicitors in this town (they charge big bucks but I know they are excellent). Almost (but not quite) enough to hope it happens. I've already checked they have people who specialize in website law, & I'll be making an appointment in the morning, to explain my concerns and ask them if they can draw up a contract I can use in future.

You all make me feel much better.

So far I've had nothing but bozos as potential clients, but with every contact I'm at least getting further along in the process before I get dropped. Meanwhile I just carry on doing HTML/CSS for a huge, well-known company, who seem over the moon to have me working with them. Just a shame I don't get to design the pages, but at least they respect me.